The Financial Post reports in its Friday, June 6, edition that the Bank of Canada decided to keep its policy rate at 2.75 per cent due to improved business sentiment. The Post's Jordan Gowling writes that deputy governor Sharon Kozicki noted that companies felt their worst-case tariff scenarios were less likely to happen, although uncertainty persists. Businesses are also starting to experience trade impacts and anticipate raising prices due to rising costs. The trade war has led the BOC to rely more on non-traditional data for its monetary policy decisions.
Each quarter, the BOC releases business outlook, consumer expectations and business leaders' pulse surveys. Recently, the governor and senior officials have met regularly with sector leaders affected by the trade conflict. Ms. Kozicki said in a speech: "Traditional data tend to look backward -- they measure what has already happened. When we expand the kinds of information we consider in our decisions, we gain a more complete view of how raising or lowering the policy rate affects consumers and businesses across the country." She added that inflation and housing reports remain "critical" for understanding recent economic conditions, they tend be in retrospect.
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